Goldman Sachs Assessed $50M Penalty (NYSE: GS)


Goldman Sachs has agreed to pay a $50 million penalty and accepted a three-year ban on access to certain sensitive regulatory information for failure to supervise an employee who was a former Federal Reserve Bank of New York employee. The action against Goldman was announced by New York State’s financial regulator. Goldman admitted the failure. That employee is now facing jail time for their actions.

The employee, Rohit Bansal, worked for Goldman for less than three months. After being hired by Goldman “in large part for the regulatory experience and knowledge,” the former regulator obtained several confidential documents from a source inside the New York Fed. Both men were fired after the leak.

Soon after his arrival at Goldman, Mr. Bansal joined an investment bank unit that advises other financial institutions on mergers and other deals. Mr. Bansal reportedly informed supervisors that ethical restrictions prevented him from advising one particular banking client that he used to oversee at the New York Fed, but Goldman placed him on the team that advised that bank beginning on his first day. The state agency said that “Goldman, including the partner and the legal department, failed to take any steps to screen the associate from such prohibited work.”

As Mr. Bansal embraced his assignments, his source Jason Gross started sending confidential information about the midsize bank and other issues to him. Throughout 20 occasions, Mr. Bansal received about 35 different documents from Mr. Gross. During his employment, Mr. Bansal distributed the confidential information and worked behind the scenes for the midsize bank. The confidential information forwarded to other Goldman employees was marked “highly confidential.”

According to lawyers briefed on the matter, federal prosecutors in Manhattan offered Mr. Bansal and Mr. Gross deals to plead guilty to misdemeanor criminal charges of theft. Both face up to a year in prison and lifetime bans from banking.



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